What Happens When a Lottery Winner Dies?
It’s a situation that most of us don’t want to think about, but eventually, our time on this planet is cut short. In such instances, relatives and loved ones are left dealing with the loss. They also have to address practical issues related to inheritances and financials.
Imagine the following scenario – a winner of the lottery is at old age at the time they became a millionaire. Or they suddenly pass on.
The family’s left dealing with many issues, including whether it’s possible to inherit the lottery money. Is this the case, or does something else happen?
While the inheritance rules differ from one country to another, there are some more or less universal stipulations as far as such massive sums of money are concerned.
Can You Pass Lottery Money Down to Your Heirs?
The short answer is yes.
Now, let’s take a look at the more detailed explanation.
Lottery prizes, whether they’re paid out in the form of lump sum or annuities, are considered personal property. When a person dies, their property is passed on to their heirs. If there’s no will, these heirs will be the spouse or the children of the person that died. Some people, however, may decide to sort such issues in the form of a will and leave the money to someone who isn’t a direct heir.
This is the case in most parts of the world. Inheritance issues are governed by particular laws that stipulate what should be done when a person has no will.
It’s still a good idea to talk to a lawyer, however. If you win a lot of money, you need legal protections, and you want to make sure that the money will go to the right people. A lawyer will guide you through the process and suggest the documents required to address in your inheritance in the way you deem most appropriate.
Lottery Money and Taxes
A lottery winner who claims a massive prize will undoubtedly be delighted with the new possessions. This person, however, also has certain responsibilities to deal with. Paying taxes on the lottery prize is one of the most critical issues to tackle.
What happens, however, if a person dies before they’ve managed to pay the income tax on the lottery prize?
Generally speaking, taxes are inheritable, just like funds.
There have already been instances of people inheriting lottery taxes after their loved ones who won passed away.
A woman in Texas made headlines when she inherited her brother’s lottery prize after his death. Because of the applicable federal tax, however, the woman was asked to also pay 18,0000 each year for the first ten years in the form of taxes (the prize was paid out in annuities). That’s how the obligation was calculated, leaving the lady to enjoy the prize in its full size only after the 11th year.
Once again, each country has its specific lottery prize taxation regulations. Check out what rules apply in your country and whether the money has been withheld automatically at the time the prize was paid out to the winner. There are also countries in which lottery prizes are not taxed in any way. In such instances, successors will receive the full amount, and they’ll be free from having to worry about owing anything to the state.
Challenging a Will
Here’s one more situation we’d like to address. This situation is more common than most people imagine, which is why it deserves to be discussed in relation to a winner of the lottery who passes away.
Let’s say your dad died two years after winning the lottery. You know that you’ll inherit the money, but a will states that the lottery prize will be left to a distant cousin. You’re going to be curious, and you’ll be thinking about ways to dispute the document.
There are very specific grounds for contesting a will. If these conditions aren’t met, you’ll have to suck it up and accept the situation.
In the US, for example, a will can be contested whenever there are suspicions of the lack of valid execution, there are considerations about the mental capacity of a person to create a will, undue influences by someone, lack of knowledge about what the will entails, a fraudulent will or a rectification claim.
Thus, you will have to argue that your parents didn’t know what they were doing when creating the will, that the will is fraudulent or that your parent was influenced by someone in a malicious or personally-beneficial way to create a specific will.
Proving this has happened can be incredibly difficult (mainly because the primary witness has passed away). Even if you’re furious about the situation, you should understand the fact that contesting a will can be incredibly difficult in the absence of evidence.
A will is always considered to be valid if it’s in the right format and created the following national procedures. Unless the specific legal reasons mentioned aren’t present, there will be no other opportunities for contesting.
The best thing to do in this situation is to hire a very, very experienced lawyer (because the other side will also do the same whenever millions are involved). Together, you will come up with a strategy bound to deliver the best results as far as contesting the will goes.
To sum it up, a lottery winner can leave the prize to their family members. This happens automatically upon a person’s passing. To leave the money to someone who isn’t a direct heir, a lottery winner will have to put together a legally-acceptable will that pinpoints the specific successor.
